Archive for April, 2010

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Chinese smell the coffee

Friday, April 30th, 2010

Whitbread, the hospitality group, is to sell more coffee to China, famous as the home of tea. The company owns the coffee shop chain Costa, as well as a host of other prominent brands such as Premier Inn and Beefeater.

Whitbread’s motto is Eat, Sleep and Drink, which sounds reasonable here at Go Remortgage News.

Yesterday the company was able to report profits up 6% at £239.1 million on the year to March. Chief Executive Alan Parker, shortly to step down after 6 years at the helm and 18 with Whitbread, also gave details of ambitious expansion plans. These include thousands of new rooms for the Premier Inn budget hotel chain.

Costa coffee is attempting to make inroads into the Chinese market with partnership deals. Mr. Parker commented, “The Chinese may not drink a lot of coffee today, but what we’re targeting is youth and the generation of tomorrow.”

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But will it help me pay my mortgage?

Friday, April 30th, 2010

It might be the last throw of the electoral dice for the three party leaders. But what about the bigger gamble for the rest of us on 6 May?

The subject of the last televised leaders’ debate was economic policy. So followers of Go Remortgage News were perhaps entitled to ask, “What’s in it for me?” As Britain emerges from recession, most of us are trying to hold onto a job, cope with debts and pay a mortgage. What did the party leaders, on first-name terms as ever, have to offer?

One thing we did learn was who was wrong. For Gordon, it was Nick and David. Wrong about tax credits, corporation tax, inheritance tax, immigration. You name it.

For Nick and David it was the bankers. They had kept too much money for themselves and failed to lend it to other people. But the way to make them lend was to tax them. There was much talk of a levy. So much that David almost forgot to blame Gordon for his National Insurance increase. Then he did remember. Several times.

The other thing we learnt was who was right. It was the audience. Or rather those asking the questions. Everyone agreed with them: “I agree with Jean” – “Of course you’re right.” Having called someone ‘bigoted’ the day before, even Gordon was at it. “Anna’s absolutely right.” What an impressive bunch those questioners were. Right about everything! I began to think we should elect them instead.

At the start of the debate we briefly entered a world where Britain had a huge budget deficit. Taxes would rise. Spending would be cut. But nobody seemed to like it much, and soon we were back in the politicians’ fairyland of giveaways.

“We’ve got to get a grip on the numbers,” said David. He was talking about immigration, and looked a bit nonplussed when Nick kept asking him about his ‘cap’. But I thought David was onto something. What were the numbers? On tax and spending for instance?

My ears pricked up – it was a number. Nick said, “Imagine if you had £10,000 and you didn’t have to give any of it away.” This sounded good. Who wouldn’t want that? Gordon wouldn’t of course. Nick had got it wrong again. But Gordon and David had plenty of their own giveaways up their sleeves. Where was the money coming from? I still couldn’t get a grip on the numbers.

One thing they did all agree on. More giant wind turbines. I pictured them whirring gently in the hot air.

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Could Britain Go Greek ?

Thursday, April 29th, 2010

With the eurozone in turmoil over the Greek debt crisis, many commentators are asking: could it happen here?

As the IMF and Germany wrestle over a 120 billion euro bailout, there is fresh concern about other “fiscally challenged countries,” – those which have soaring budget deficits and high national debts, such as Portugal and Spain.

With a deficit rising to almost 12% of national income and a lack of detail in debt reduction plans proposed by politicians, Britain’s finances are also under the spotlight. Some fear that a wave of hostile speculation may pick off indebted countries one by one – with the UK waiting its turn.

A downgrade in the nation’s credit rating has long been on the cards. Analysts point out that investors are already demanding a risk premium for holding UK government debt. And if Britain lost its coveted triple – A rating, keeping up interest payments on the debt would be even more expensive.

There are good reasons to think that Britain is better placed to avoid a Greece’s fate than might appear. First, most of Britain’s debt is long term. With fewer repayments falling due, the Bank of England actually needs to seek less in loans to cover its borrowing needs than other major European countries this year. Secondly, Britain retains its own currency and so, unlike Greece, can set its own interest rates and let the pound fall to stimulate growth.

But, with investors fighting shy of government debt, and uncertainty about the plans of politicians, jitters about Britain’s creditworthiness seem inevitable.

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That’ll be £564k please

Thursday, April 29th, 2010

The good news? With life expectancy on the increase, many of us can look forward to at least 20 years of retirement. The not so good news – it could cost us more than half a million pounds to enjoy it.

That’s the claim of a report by annuity specialists MGM Avantage, who reckon that, after recent price hikes, an average of £564,000 is the amount a couple require to meet basic living costs over two decades. Those in London could need considerably more, because of the higher cost of living there.

The figure is based on household spending of £23,000 each year on things such as food, petrol and clothing by those aged 65-74, as against £15,000 for the over 75’s. The current basic state pension of £97.65 per week amounts to £10,155 a year for a couple.

Experts conclude that only the very rich and those with gold plated pensions can count on financial security in old age. While charities point out that many of us are too busy making ends meet today to save for tomorrow.

A separate study by Key Retirement Solutions estimates that the newly retired find themselves with debts of £36,000 on average – including credit cards, loans, overdrafts and mortgages. All of which this points to the need to take a long, hard look at current loan and mortgage arrangements to make sure of getting the best deal now.

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House prices, Up Up Up

Thursday, April 29th, 2010

The annual rate of House Price Inflation has risen to 10.5%, highest since June 2007, according to the high street building society, Nationwide. In April alone, prices rose by 1% to push the average price to £167,802, although economists predict that the surge seen in house prices last year will tail off towards the end of this year, when sellers outweigh buyers. They point out that prices in the past three months were just 1.1% higher than in the preceding three months, which reflects the fact much of the annual increase in prices has been due to the rebound in prices that took place last summer.

Increases in prices notwithstanding, activity in the property market is still rather subdued. Thanks largely to the credit crunch, there has been an enforced rationing of mortgage funds, which in turn means that the average first-time buyer still has to pay a 25% deposit upfront.

The main source of demand, according to Nationwide, since the middle of last year were homebuyers taking out mortgages, rather than cash buyers, despite the ongoing constraints on mortgage availability for those with small deposits. The proportion of cash transactions averaged 43 % in 2008, when mortgages were least prevalent, against 37 % in 2007.

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Learn about Money

Thursday, April 29th, 2010

The Government has launched a new body to help people to learn more about money and Mortgage matters and avoid getting into too much debt. The snappily named Consumer Financial Education Body, or CFEB, takes over its responsibilities from the Financial Services Authority. The body will offer a guidance service called Moneymadeclear, with its own website. Financed by a levy on financial institutions, the CFEB is to be chaired by Tony Hobman, former Pensions Regulator chief.

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Mortgage and Loan Customers Ignored by Big Banks

Wednesday, April 28th, 2010

We’ve all been there. You have a problem with your bank – something related to your mortgage, loan, or your credit card, say. You first call them, the call is transferred to the mortgage center say, a call centre thousands of miles away, your complaint is noted, shelved and forgotten. Or you talk to the loan manager of your local bank, who promises to do something, and you don’t hear from them for weeks. Frustrated you try again. And eventually, you try to take your complaint to a higher level.

Well, you’re not alone. Last year, of the three million people who complained to their banks, more than 127,000 felt that the bank did not help them enough. So, they went to the Financial Ombudsman instead. And in 59% of the cases, they found in favour of the mortgage or loan customer, up from 50% the year before.

The Financial Services Authority (FSA) isn’t happy. It has called the behaviour of the banks “unacceptable” and asked five big high street chains to change the way they deal with customer complaints. The FSA is investigating two of these banks, and if found guilty of misconduct, could face huge fines. Call centre and branch staff consistently ignored complaints or carried out poor investigations even when the bank was at fault, the report says. It also found that incentive schemes encouraged staff to be more interested in selling their own mortgage, remortgage, loan or other products than settling complaints.

According to the Financial Ombudsman Service, payment protection insurance was the biggest area of complaint, where they upheld almost 90% of the complaints last year. The other common areas of complaint include misselling of mortgage endowment policies and other with-profit investments, overdraft and credit card interest charges, and lack of payouts from travel insurance policies. They also report that the five banks which were the subject of most complaints were Lloyds, Barclays, RBS, Abbey and HSBC.

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IFS Sees Cuts Ahead

Wednesday, April 28th, 2010

GoRemortgage.co.uk has learned today that the Institute of Fiscal Studies has taken all three main parties to task over their public spending plans. The prestigious think tank criticizes Labour, the Conservatives and the Lib Dems for not being frank about measures necessary to achieve reductions in government borrowing. Cuts and tax rises so far announced by the parties represent, says the Institute, only a fraction of the amounts needed to meet targets on deficit reduction, while promises of ‘efficiency savings’ lack credibility.

The Institute reckons that Lib Dem and Labour plans would require spending cuts on a par with those of the 1970’s, while the Tories would need to cut on a scale not seen since World War II. The government is also blamed for not conducting a detailed spending review in its various departments.

Meanwhile shares fell worldwide yesterday amid fears that Greece might default on its debt. Greek government bonds were downgraded to so-called junk status by ratings agency Standard and Poor. The country is seeking some $40 billion dollars in loans from Euro zone governments and the International Monetary Fund to shore up its finances.

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Bankers Grilled

Wednesday, April 28th, 2010

Executives from Goldman Sachs, the leading investment bank, faced a grilling from members of the US Senate yesterday over a $1 billion scandal.

Senators delving into the causes of America’s financial crisis showed growing irritation at the replies given by the bankers, who included Daniel Sparks, former head of mortgages, and chief executive Lloyd Blankfein.

The bank is alleged to have sold products based on mortgage debt to investors, while at the same time staking its own money on a fall in the price of the same assets. Some of Goldman’s own employees were said to have described such investments as ‘junk’.

Asked whether he had a duty to act in the interest of his clients, star trader Fabrice Tour replied, ‘We have a duty to serve our clients . . . by showing prices and offering liquidity.’ Mr Tour was recently named by the US Securities and Exchange Commission, which has filed fraud charges against the bank. He and Goldman Sachs deny the accusations made against them.

Meanwhile, some took the rise in the Goldman’s share price after yesterday’s hearing as a sign that the bankers had the better of the exchange.

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Go Knows the score

Wednesday, April 28th, 2010

Borrowers still face something of a minefield when seeking mortgages or loans.

In the recent past, lenders were often willing to turn a blind eye to the odd lapse in your payment record. But after the credit crunch, and the repercussions of bad debts across the financial world, many became extremely cautious. Lenders were unable or reluctant to lend – and as recently as this week, Lloyds Bank announced that their lending remained broadly flat.

As banks recover and economic confidence revives, lenders are starting to take a less restrictive view of those who may have had a few financial difficulties in the past. But they will still look closely at the risks presented to them by borrowers.

Your credit score indicates the level of risk you pose to a lender. That is why it is important to keep your score as healthy as possible. For example, make sure you pay something off your credit card each month, if only the minimum. And keep an eye on your credit limit: exceeding it will adversely affect your score.

For those who have missed some payments in the past, the good news is that 12 months of on-time payments will reassure many lenders that you do not present an undue risk.

When the time comes to look for a new mortgage or loan, an experienced broker can also be of great help. GoRemortgage has detailed knowledge of the requirements of different lenders, and of the view they will take of your credit history. So you can make the most of your credit score, and find the loan best suited to your needs.

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